Interest Rates Set to Rise Again: Time to Look at Property Portfolios?
Despite the pound strengthening under new Prime Minister Rishi Sunak and the mortgage market recovering from the chaos that ensued following the government’s disastrous mini budget debacle, the Bank of England is widely expected to increase interest rates again on Thursday as it seeks to tame soaring inflation.
Many economists predict a further rate rise of 0.75 percentage points, which would take the base rate to 3% - representing the biggest increase in 33 years.
With inflation continuing to soar and further interest rate hikes likely to be on the horizon, rising mortgage costs mean many believe the age of buy-to-let is over.
Is now the time to look at Property Portfolios like Avora Capital, which allow property investment without the need for a mortgage?
Indeed, they are one option for those looking to escape mortgage uncertainty and the associated squeeze on profits that is being seen as a result of soaring interest rates greatly increasing monthly repayments.
Time to Move on From Buy-to-Let?
Even before the mortgage turmoil seen in the aftermath of Kwarteng’s mini budget, mortgage rates have been climbing for some time - increasing from 1.79% to 3.51% in the 12 months to August 2022 according to research by estate agent Hamptons.
Clearly, this has greatly eroded the profitability of buy-to-let - and it’s a situation that’s developed on top of other negative factors such as increasing tax and legislation changes. Given the situation being faced by many landlords, it’s unsurprising that many are looking at other options.
So, is now the time to move on from buy-to-let? For many, the answer is ‘yes.’
Property Portfolios
One buy-to-let alternative comes in the shape of property portfolios such as Avora Capital, our smart investment model designed to deliver regular returns with minimal effort required by the investor. Perhaps most importantly given the current climate of soaring mortgage repayments and rising landlord costs, it offers a chance to earn a share of income without the need to buy and own a property.
How does it work?
When you invest in Avora Capital, your money is used to buy a diverse portfolio of income-producing rental assets and, in return, you are issued with shares of the company.
There are many advantages to this for investors, including:
- No mortgage - and therefore no exposure to rising mortgages repayments eroding landlord profits
- A hands-free investment option - maintenance and repairs are taken care of within the contract
- The chance to capitalise on a lucrative asset portfolio - including sectors that may be unavailable to individual private landlords, such as social housing
- No stamp duty, legal fees or estate agent’s fees
- Regular returns each quarter
For a long time, buy-to-let has been by far and away the most popular way to invest in property in this country - but times are changing. By becoming part of a larger consortium, investors can invest in property without many of the drawbacks of being a landlord and property owner.
For more information on Avora Capital, please contact us today to make a request for information.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.